DFAS hustles to salvage $81.6 million EDM system

The Defense Finance and Accounting Service is scrambling to correct problems that have stalled an $81.6 million program that was intended to convert the Defense Department's major financial processes to a paperless environment.

The Electronic Data Management (EDM) system, a large-scale imaging and workflow program, was designed - when fully deployed - to help DOD streamline its business processes and avoid recurrences of the department's highly publicized problems with billions of dollars in unmatched disbursements.

However, nearly two years after a September 1994 award to Electronic Data Systems Corp., the state-of-the-art imaging system remains a small prototype, hobbled by technical problems and changing program requirements.

In the latest negotiations, DFAS and EDS last week agreed to a new timetable for EDM that calls for a full working version to be installed and tested at the first site by the end of the year. Broader deployment would begin two to three months later.

Industry sources familiar with the program said they believe EDS is a long way from delivering an operational EDM. However, DFAS officials contend that despite difficult performance problems, EDM is back on track.

The difficulty has come from trying to tailor a complex technology solution to equally complex business processes, said Teresa Walker, DFAS' deputy director for plans and management.

"This is really new technology for DFAS, and we have been on a steep learning curve," she said. DFAS must work in "a very large business process with very large volume and a highly integrated environment," she said.

Under the EDM task-order contract, EDS is required to develop the EDM prototype at the Omaha, Neb., DFAS operating location. Omaha runs one of the Defense Department's vendor pay systems, which processes and pays invoices from defense contractors.

DFAS expects to tailor the core EDM technology for its five regional centers and 20 or so other operating locations, gaining efficiencies and savings with each deployment. The EDS contract is expected to cover the Denver and Columbus, Ohio, regional centers and Denver's five operating locations, including Omaha.

Last week's agreement followed several steps by DFAS to keep EDM from going too far off track. Earlier this year, DFAS sent EDS a letter expressing concern about its slipping delivery schedule. DFAS also brought in Unisys Corp., its primary support services contractor, to assess the problems with EDM and how they might be addressed. Unisys declined to comment on its involvement.

In terms of time and cost, EDM's problems are fairly modest. The new timetable runs about six months longer than DFAS had most recently projected. DFAS had hoped to begin ordering the first system components this August for full deployment at the first round of sites in the fall.

The agency also has invested about $7 million so far, overshooting its modest $2.5 million to $3 million budget for prototype development.

However, according to sources familiar with the program, DFAS was concerned that EDM was mired in technical difficulties, even while operating on a very small scale.

The prototype of EDM, which eventually would support hundreds of users operating simultaneously, has been unable to support more than a couple of users with satisfactory performance, sources said.

One major hurdle has been the ability to access multiple applications simultaneously without exceeding memory requirements on the Unix desktop, Walker said. During the course of processing a disbursement, DFAS workers need to call up four primary document images, in addition to their various office automation applications, such as electronic mail and spreadsheets. DFAS believes EDS is getting close to addressing this issue.

Improving Performance

DFAS also has not been satisfied with the response time of the imaging software. According to Walker, EDS and DFAS are working closely with Wang to improve performance.

Any delay in delivering that prototype only adds to an eight-month delay between the award in September 1994 and EDS' selection of its team members in April 1995. During that gap, DFAS and EDS undertook two business process re-engineering studies: one studying the Omaha project and the other looking at DFAS as a whole.

Following these studies, DFAS adjusted its requirements, with a stronger focus on providing a tighter fit between EDM and its business operations.

The changes ranged from more tightly integrating the workflow capabilities into EDM to adding index files so users could select only the documents they needed from a given set.

"Scope creep" - where requirements are added after a program is under way - is one of the classic problems that organizations run into on large imaging and workflow projects, said Mike Muth, a senior consultant with the Delphi Consulting Group's Washington, D.C.-area office. "I suspect the biggest thing is a lack of a firm spec; that's the thing we see most often," Muth said.

"We really began to understand the [scope] of the solution and where we wanted to go," Walker said. "We view [EDM] as a way to move all our operations into a more common business structure and to use common business processes."

"We've got more requirements for this technology than we've got contract authority," she said. "We are incredibly paper-based, and this gives us a way to get out of the paper environment."

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- Elana Varon contributed to this article.

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EDM: Mailroom to management

Essentially, EDM will give DFAS the ability to digitize incoming hard-copy financial documents.

More importantly, these electronic documents can be routed through the appropriate process, beginning with the mailroom.

The system also will provide an efficient way to store all documents for the six and a half years required by law. The Omaha DFAS operating location, where EDM is being prototyped, receives about 300,000 documents a month.

DFAS expects EDS to finish development in October or November and finish acceptance testing in mid-December.

After two to three months of live operation, DFAS expects to begin deploying the system at the Denver regional center as well as at four other operating locations.